A bad property manager costs money and time. Without the right management, your property sits on the market too long or you place a bad tenant because you’re anxious about the days on market. Bottom line: you waste resources when you don’t have a good manager.
The right property management company can save you thousands of dollars. Rather than waiting around, look for these five early warning signs that it’s time to ditch your property manager and what you should look for instead.
Warning Signs It’s Time to Ditch Your Property Management Company
1. Poor Communication
If your manager is difficult to contact, it may be time to find someone new. They should respond to calls or emails within 24 hours. Unanswered messages are simply not acceptable.
2. Missed Deadlines
There’s no room for missed deadlines in the real estate world either. For example, we contact tenants 60 days before their lease is up to see if they want to renew. They have to answer 45 days prior to the end of their contract. If they forget to answer, the lease legally must be renewed on a monthly basis.
If you have deadlines you were trying to meet, that complicates things. Let’s say you were planning to move back in the house after living out of state. If the tenant hasn’t answered, they have the right to stay in the property for 30 days after the lease. Your plans have to wait because your manager didn’t get the answer in time.
Missing deadlines starts to snowball. However, a good property manager contacts your tenants and follows up to avoid this situation altogether.
3. Untimely Owner Disbursements
How quickly and reliably does your property management company disperse the rent they collect? We collect the rent from the tenant and deposit it immediately. Once it clears, we transfer it to the owner. Some companies take up to 30 days to pay. We focus on getting owners their money quickly. In fact, we collect rent on the fourth of each month and pay over 500 investors by the eighth.
If you ever see that time lapse fluctuate, it’s a red flag that your company has some internal problems. Take an unreliable payment schedule as an indication to move on.
4. Inaccurate or Unauthorized Charges on the Owner Statement
Repairs have to happen. When they cost more than expected, the manager should always contact the owner to get the expense approved. If you okay charges for $200, but a repair costs $250, you should get the chance to approve that difference. There’s no excuse for unauthorized expenses.
When a vendor has additional costs that come up during a job, we tell them we need approval for any overage. If they do the work without approval, we’ll ask the owner to pay but the vendor may have completed that work at their own expense. When you approve a repair, it should stay within the budget you approved, or you should get a call.
5. Vacancies of More Than 3 Weeks
If your property is on the market for over three weeks and you’re not getting updates from your property manager with their suggestions, that’s an issue.
Check MLS first. If your property isn’t listed there, it’s not getting high traffic. Thousands of real estate agents regularly check MLS for listings for their clients. They may even have search notifications set for certain types of properties. If the management group has only listed a property on their website, they aren’t tapping into the full market. It’s basically like putting a sign in your yard to promote your garage sale rather than posting an ad. Obviously, an ad exponentially increases your traffic.
So why wouldn’t they list it on MLS? They’re trying to save their money. When you list a house, you have to offer commission to another agent. By leaving it off, they get to keep the leasing commission. This is huge for franchises. Their model isn’t as compatible with the local MLS software, so they leave it off, even though it would rent faster on the bigger network.
If your property is on MLS but still isn’t moving, the house could be overpriced or have another problem. Whatever the issue, the manager should keep the line of communication open. We tell our managers, “If a property is overpriced, tell the owner every day. Show them data to support the numbers and try to convince them to lower the price.” We want to be problem solvers. If we aren’t, the house sits so long the owner becomes impatient. Then they blame it on our marketing and hire another company.
What to Look for in a DFW Property Management Company
If your current property manager isn’t up to par, it’s time to move on. A property manager handles your most expensive investment. So, you need to make sure whoever you sign a contract with has the right experience to keep your property in good shape, occupied and making you a profit.
Here are a few questions you should ask before hiring a management company:
Is Your Company A Franchise?
Working with a franchise management company seems like it would be an ideal situation. After all, they use business processes that have been successful with other locations.
The problem is, whoever buys into a franchise doesn’t have to be an expert in the field and they haven’t built the business from the ground up. Instead, they bought into the processes that someone else created.
There are perks of hiring a locally owned property management company instead; the managers have practical experience and they know your local market. But if you are considering a franchise, you should still interview them like you would any other property management company.
What’s Your Specialty?
Under the residential umbrella, there are a variety of properties like high-rise apartment buildings, duplexes, multi-unit homes and single family homes.
Someone who only manages buildings with 100+ units probably doesn’t know how to manage a single-family home and vice versa. Make sure you hire someone with experience overseeing your kind of rental.
How Many Properties Do You Manage?
This question measures a manager’s experience. A manager is likely new on the scene if they haven’t managed many properties, and you may want to steer clear of them unless you’re willing to take a chance.
At the same time, a manager who has too many properties at once isn’t a good choice either. It makes you wonder how much attention they have to spare for your property, which leads to the next question.
What’s Your Ratio of Staff to Properties Managed?
Work overload impacts a manager’s response time. We’ve found the most a property manager can handle at one time is 175 homes – with the help of an administrative coordinator. If a manager takes on any more than that their customer service starts lacking.
Where Are Your Offices?
The management office should be near your property. If it’s over an hour away, it’s unlikely anyone from the office will arrive during an emergency in a timely manner. This is especially important if you want to be a hands-off investor. You need to know someone is regularly checking in on your property and can be around to offer customer service to your residents.
What’s Your Accreditation?
Finally, credentials are important because it legitimizes a business. Look for companies that have a good standing with the Better Business Bureau and Texas Real Estate Commission. It proves they’re doing something right.
